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E-check is a term anyone with a checking account should know. Bankrate explains it.

What is an e-check?

An e-check, or electronic check, is the electronic version of a check that you can use to make a payment online. To use an e-check, you need a checking account and the bank routing number, the bank account number, and the name that is on your account.

Deeper definition

Any modern checking account gives you the ability to send an e-check as long as your bank allows you to use this option online. In addition to allowing you to make payments easily online, an e-check is a valid option in any situation where a paper check is used. The e-check also allows users to link it with helpful and value-added information.

Example of the e-check process

Using an e-check to pay for goods or services online requires a select process. This procedure is similar to that for a paper check, though it is faster due to its electronic nature.

When writing an e-check, the first thing that happens is that the transaction is authorized via an online payment form. Other payment options include via a landline, smartphone, or a form you sign.

The payment information, including that of the person who wrote the e-check, is submitted to an online payment processing center. Examples of this include PayPal, a bank, or a payment service that handles e-check transactions.

The information that the online payment processing center receives is then processed via the Automatic Clearing House network. The ACH network was developed in the 1970s to handle electronic transactions and make such transactions easier and more fluid.

Once everything has cleared and been processed, the funds are withdrawn from the account attached to the e-check. Upon completion of the transaction, the payer receives a receipt of payment to their account.

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